SE Asian rubber trade slow on holidays
SE Asian rubber trade slow on holidays
SINGAPORE (Reuter): The pounding taken by regional currencies
from speculators and a holiday on Monday in Thailand and Japan
will keep the Southeast Asian rubber market quiet this week,
rubber dealers said.
Major consumers in the U.S. and Europe were away for the
summer holiday season, compounding the situation, they said.
"The (Indonesian) rupiah, along with some other regional
currencies like the (Malaysian) ringgit, has come under attack. I
think we should stay out of the market until things settle down a
bit," one trader in Indonesia said.
"It's a bearish market. Offtake is weak and consumers are
living on a hand-to-mouth basis. The holiday today in Thailand
and Japan will keep the whole thing soft," a dealer for a rubber
trading house in Singapore said.
Buyers in Thailand, the world's biggest natural rubber
producer, stayed out of the market.
"Buyers have very bearish views so they bid at unreasonably
low prices which most shippers are reluctant to sell," said a
trader in the Thai rubber center of Hat Yai.
"A weaker baht was also one of the reasons why they gave such
low bids. But, surprisingly, I heard some shippers agreed to
sell," he said.
An executive of a company in Singapore involved in trading
rubber in the region said the supply of rubber continued to run
ahead of demand.
"There's just too much raw material around here," the official
said. "I expect INRO (International Natural Rubber Organization)
will have to intervene sooner or later."
The rubber trade has been waiting to see if INRO will step
into the market to shore up sagging rubber prices after its five-
indicator price slipped two weeks ago below the 'may-buy' level
of 183.00 Malaysian/Singapore cents a kg.
Most of the trade believes INRO will intervene if the price
approaches the 'must-buy' level of 172.00 cents.
The Thai benchmark RSS3 for October delivery was quoted around
92-97 U.S. cents a kg FOB Bangkok while December RSS3 was quoted
around 92-98 cents a kg on the same basis.
In Indonesia, offer prices were quoted at 43.50 cents a kg for
August shipment FOB Padang, 44.50 cents FOB Medan for October
shipment, 44.00 cents FOB Surabaya for August shipment and 43.75
cents for August shipment FOB Pontianak and Jambi.
Malaysian traders said rubber prices may remain steady or even
rebound a little this week, but that it would depend heavily on
the movement of the ringgit against the U.S. dollar.
"The prices have gone up quite a lot and I think it should
either hold at this level or ease off a bit," a trader said.
The ringgit fell to a three-year low on Friday, closing in
Kuala Lumpur at 2.6120 to the dollar. For the whole of last week,
the Malaysian unit tumbled about four percent against the
greenback.
Traders said although this made Malaysian rubber more
competitive against Thai and Indonesian origins, the fall was too
fast for the market to grasp.
The Malaysian Rubber Exchange and Licensing Board quoted the
benchmark RSS1 buyer for August at 236 Malaysian cents a kg at
the close of the market last Friday, up seven cents from the
previous week.
The board quoted SMR20 for August buyers four cents up from
the previous week at 237 cents a kg. Traders quoted the SMR 20 on
Friday at 241 cents, SMR CV at 295 cents, SMR L at 277, SMR5 at
248 cents, SMR10 at 242 and drum latex at 193 cents.